Edison International Q3 FY2026 earnings call

• Financial Performance and Guidance: The company reaffirmed its 2026 core EPS guidance range of $5.90 to $6.20, with a bias toward the middle of the range. It also maintained its 2027-2028 guidance ranges and long-term core EPS growth target of 5% to 7% through 2030.
• Wildfire Liability Reform Urgency: Management expressed disappointment that California’s legislative session ended without durable wildfire reform. They are advocating for a special legislative session to pass a bill by the constitutional deadline of November 15, emphasizing that delay into 2027 would impose significant costs on customers and the economy due to higher financing costs.
• Grid Safety and Reliability: SCE has hardened approximately 90% of its distribution system in high fire-risk areas, including over 7,200 miles of covered conductor. The utility is leveraging AI-enhanced inspections and advanced modeling to target risk reduction. OEIS recognized SCE’s transmission inspection program as the most comprehensive among large IOUs.
• Eaton Fire Investigation: SCE acknowledges that its equipment likely caused the Eaton Fire ignition based on LA County Fire Department reports. However, management maintains there is no basis for felony liability or conscious/willful disregard. They remain confident they can demonstrate prudence under California law, which evaluates actions against those of a reasonable operator rather than requiring perfection.
• Compensation Program Status: The Wildfire Recovery Compensation Program (WRCP) is active, with October seeing the highest claims submissions of the year. SCE has extended more than 3,200 offers totaling approximately $1.1 billion. The deadline for submissions is November 30.

The transcript does not provide a breakdown of financial performance by specific product segment or revenue contribution percentages. Edison International reported consolidated core earnings per share (EPS) of $1.92 for the third quarter of 2026, compared to $2.34 in the prior year period.

• Reaffirmed 2026 Core EPS guidance range: $5.90 - $6.20.
• Reaffirmed 2027 and 2028 Core EPS guidance ranges.
• Maintained long-term Core EPS growth target: 5% - 7% through 2030.
• Targeted FFO to debt ratio: 15% - 17%.
• Dividend payout policy: 45% - 55% of SCE core earnings.

• Legislative Inaction Risk: Failure to secure durable wildfire liability reform by the November 15 deadline could lead to continued elevated credit spreads, increasing financing costs for infrastructure investments. This uncertainty may force reductions in capital investment for electrification, clean energy transition, and grid readiness.
• Credit Rating Downgrade: If Edison’s credit rating falls below investment grade, it would significantly increase the cost of financing at a time when customer affordability is critical.
• Litigation and Liability Uncertainty: While management asserts prudence, the final determination of liability, prudence, and reimbursement involves complex legal processes that may take years. There is risk associated with the volume and timing of claims, particularly as statutes of limitations approach in January 2027 (personal injury) and January 2028 (property damage).
• Operational Failures: Despite extensive hardening, remaining risks exist, necessitating continuous monitoring and adaptive response to changing weather conditions and wildfire threats.

Q: Analyst asked about the timeline for a potential special legislative session and how Eaton Fire WRCP data might inform Q4 reserve bookings. / A: CEO clarified that bills must reach the Governor by Nov 15, with a 12-day review period. Regarding reserves, CFO noted they are monitoring precedents like PG&E’s Dixie/Kincaid cases and FERC standards to estimate liabilities, but precise booking depends on the final WRCP claim volume and legal outcomes, which remain uncertain until after the Nov 30 deadline.

Q: Analyst queried if insurers' subrogation rights should be part of wildfire reform and what magnitude of CapEx cuts might occur without reform. / A: CEO explained that subrogation friction adds costs; resolving it faster via reform could save money through time-value-of-money benefits. CFO stated that without reform, higher capital costs would force prioritization of safety/reliability over load growth and clean energy projects, though exact CapEx reductions for the 2029 GRC depend on bottom-up planning still underway.

Q: Analyst asked about remaining uncertainties in proving prudence for the Eaton Fire and whether new evidence changes their assessment. / A: CEO reiterated confidence in demonstrating prudence under AB 1054, noting the process will take years as PUC waits for most settlements. He firmly denied any basis for felony or willful disregard allegations, dismissing third-party scrutiny as meritless and self-interested.

Q: Analyst asked if a special session could still pass a bill after Nov 15 and if utilities are offering concessions. / A: CEO confirmed no legislation can be sent post-Nov 15 as the current legislature expires Dec 1. He declined to discuss specific concessions but emphasized an open-minded approach to stakeholder trade-offs to achieve a solution that satisfies the Senate, Assembly, and Governor before the deadline.

Q: Analyst asked about the estimated cost to customers if reform is delayed until August 2027 and key data points from the upcoming CPUC report. / A: CFO cited an incremental $300 million cost over the life of 2027 bond issuance alone as a key data point illustrating the impact of prolonged elevated credit spreads. CEO expressed anticipation for the CPUC report, praising staff diligence in previous analyses like the Earthquake Authority submission.